China in 2011:

Navigating the “New” China

David Edmiston 邓大为 , International Trade Specialist U.S. Commercial Service Minneapolis China Business Information Center www.export.gov/china

Presentation

Outline

• The “New” China 1.

2.

3.

• Market Drivers • What this Means for Alaska Companies • How We Can Help 4.

www.export.gov

THE “NEW” CHINA

CHINA NOW

• Historical GDP Growth: Value chain shifting w/ 48% industry, 40% service, and 12% agriculture • Economic Size: World’s 2 rd largest economy • Consumes 33–50% of world’s coal, cement, steel, iron ore • China: US.’ #3 Foreign Export Market – 2010 Trade Surplus $273 B – 2010 U.S. Exports to China $91 B • Foreign Exchange Reserves =$2.622 T

CHINA NOW

•

Healthcare

200 M uninsured • • 1/10 of population carrying hepatitis B

Education

State schools-no funding for migrant students

Income Disparity

• • Urban Disposable Income $2,895 Rural Disposable Income $897 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0 Urban per capita Rural per capita 2007 2008 2009 2010

A

More

Realistic Picture…

• • •

Unemployment

Official 4.3% Unofficial 9% 39 th in the world • • • •

Pollution

70% Electricity from coal #1 Emitter of fossil fuels 10,000 deaths per year HK, Macau and So China caused by air pollution price of pollution $968 million/yr in health and productivity loss

Market Drivers

Urbanization

2005 43% 2010 47% 2025 Migration 400 M

Newly Emerging Markets

Top 14 = 50% US exports

Middle Class Surge

2009 5% of population 2020 40% of population

Second Tier

Hefei, Kunming

Growth Markets

Driver: Emerging Consumer Culture

• • • • Lifestyle Indicators Mobile Phones: 800 million subscribers Internet Usage: 457 million users Private Vehicles: 26 million cars Outbound Travel: 40 million tourists Xinhua Xinhua Xinhua Reuters

China’s 12

th

Five-Year Plan

“New Magic 7”

• New energy • Energy-saving and environment protection • Biotechnology • New materials • Clean-energy vehicles • High-end manufacturing • Next generation info tech

12

th

Five-Year Plan



Environment & Clean Energy

o Environmental Protection RMB up 10 % o o o o Energy consumption cut by 16 % Energy Consumption from Non-fossil fuel = 11.4 % Carbon dioxide emission cut 17 % Water consumption/unit value-added output cut 30 %

WHAT THIS MEANS FOR ALASKA COMPANIES

Alaska Global Exports

• Alaska Global Exports in 2010: $4,154,626,473 • Export Growth: Exports in 2010 were up 27% from 2009 figures and 15% from 2005 •

Top 5 Export Markets in 2010:

– Japan – China – South Korea – Canada – Switzerland Foreign Trade Division, U.S. Census Bureau

Alaska Exports to China

•

Alaska 2010 Exports

to China: $921,276,201 •

China Export Growth:

Exports in 2010 were up 57% from 2009 figures and 173% from 2005 Foreign Trade Division, U.S. Census Bureau

China: Partner or Competitor?

Top 5 challenges for the Coming Years

Bureaucracy Human Resource Constraints Unclear Laws & Regulations Unclear Regulatory Interpretations IP Rights Infringement

Positive Business Outlook

Companies in China • 71% expect increase revenue • 90% are “optimistic” for the future AmCham Shanghai 2010- 2011 China Business Report • 85% will increase investment in 2011 China Business Climate Survey 2011

Performance Improving

• 87% companies reported revenue growth • 79% companies “very profitable” • 61% increase market share for China products/services AmCham Shanghai 2010-2011 China Business Report

Emerging Markets

Xi’an

Electrical Machinery (118%)

Guangzhou

Aircraft; Spacecraft (404.2%)

China’s Imports From U.S. 2009 Tianjin

Railway (634%)

Wuhan

Chemicals (110%)

Sector Specific Opportunities

(a few examples….)

      Healthcare: 122 Billion USD to provide basic medical coverage Transportation: Goal to build 13,000 km high-speed rail by 2012, reaching 170 cities by 2025 Smart Grid: $7.3 billion invested in 2010 vs. $7.1 billion in U.S., $590 billion total planned investment Environment: China will invest $303 billion in water projects in the next 5 years. $11 bil for wastewater treatment in 12 th 5-year plan Travel & Tourism: U.S. is 4 average tourist spending $6,000, 100 million tourists projected for 2015 th largest market, up 40% in 2010, Education: Chinese graduate applications up 19% in 2009 (up 7% worldwide); 98,000 Chinese students in the US in 2009, up 21%



Why Green Tech is Growing

Water

20% unusable for industry  $303 B through 2016  Rural wells/ Urban Wastewater/ Key Water Body Pollution .

 $11.5 B to curb heavy metal pollution (over next 5 years) 

Air pollution

Deaths/year 400,000

Oil Consumption

Renewable Energy Opportunities

Wind

• Largest Producer

Solar Power

• 2009 33% World Investment • PV Production 90% exported • 2010 Install Capacity

10 GW

• 2009 Capacity 8 GW • 2020 Target 150 GW • 2020 Target 20 GW

Clean Transportation

Automobile Market

• 2009 13.5 M vehicles • 2030 200 M vehicles

New Energy Vehicle Program

• 2012 Goal 60,000 electric vehicles

HOW WE CAN HELP

Are You China Ready?

Export Experience Senior Level Commitment Financial Resources Due Diligence Regulatory Issues IP Strategy Take a “China Ready” Assessment Survey :

www.export.gov/china

Practical Tips

Understand the Market • View China as many different markets • Consider Regulations and Standards • Visit often – “mind the shop” Protect Your Interests • Due diligence • Register IP • Seek legal counsel • Exit strategy Realistic Expectations • Avoid “Chinaforia” • Overnight success is uncommon • If it sounds too good….

Commercial Service in China

 19 Cities ◦ 5 CS Offices ◦ 14 Secondary Markets  140+ Officers & Trade Specialists

Core Market Services

Business Facilitation

• International Partner Search • International Company Profile • Gold Key Matching Service • Single Company Promotion

Trade Promotion Events

• International Buyer Programs • Trade Shows & US Pavilions • Trade Missions

Customized Programs

• Platinum Key Service • Advocacy & Trade Disputes • Market Research

Market Research

• Market Research Library • Country Commercial Guide (CCG) • Customized Market Research

Gold Key Matching Service • Pre-screened appointment schedule arranged for you before you travel overseas • Customized market and industry briefings with our local trade specialists • Timely and relevant market research • Post-meeting debriefing with our trade specialists and assistance in developing appropriate follow-up strategies • Help with travel, accommodations, interpreter service, and clerical support SME: $700 first day, $300 each additional day; Large Company: $2,300 first day, $1,000 each additional day

International Company Profile (ICP) • Determine whether an overseas company or individual is a suitable partner: Management details Business activities Product/service lines Financial condition Credit-worthiness Trading experience Market coverage Business connections in the target country * SME: $600; Large Company: $900

Trade Events Single Company Promotion • The Single Company Promotion service offers support and event facilities which will allow you to engage your target audience through: – Product launches – Sales seminars – Staff training – Networking receptions Facilities available include: exhibition halls, auditoriums, meeting rooms, hotels and even the residences of some US Ambassadors.

* Cost vary depending on event and market

Trade Shows/Trade Missions • • • International Trade Shows – U.S. pavilions put you in the best int’l trade shows with access to thousands of buyers. – Our team of Commercial Specialists arrange one-on-one meetings with potential buyers. International Buyer Program (IBP) – U.S. Department of Commerce selects leading domestic trade shows to promote through its global network of offices and contacts.

– U.S. Commercial Service staff in our Embassies and Consulates abroad recruit and bring delegations of qualified buyers, prospective representatives and distributors to domestic trade shows. U.S. Commercial Service staff then facilitates meetings between buyers and exhibitors.

International Trade Missions* – Opportunity to meet with distributors, government and industry officials, prospective customers, and U.S. Embassy officials.

* Costs vary depending on the mission

Market Intelligence • Country Commercial Guides (CCG) Leverage reports, prepared annually by U.S. Embassy staff, containing information on the business and economic situation of foreign countries and the political climate as it affects U.S. business and investments.

• Trade Data and Analysis Obtain the latest annual and quarterly trade data by country, state, commodity, and year.

Find industry-specific trade data and analysis.

Get country-specific tariff and trade agreement information.

• Customized Market Research* Get specific answers to your specific international business questions.

* Cost vary depending on research preformed

Consulting and Advocacy Advocacy Center • Exporting today means more than just selling a good product at competitive prices, it can also mean dealing with foreign governments and complex regulations. The Advocacy center helps companies by putting the resources and authority of 19 U.S. government agencies behind your company to help resolve problems such as: – Contracts pursued by foreign firms who receive assistance from their own governments to pressure a customer into buying their product or service – Unfair treatment by government decision makers, preventing a U.S. company from competing for a project – Tenders tied up with bureaucratic red tape, resulting in lost opportunities and unfair advantage to other competitors http://export.gov/advocacy/

Trade Compliance Center • Ensures that: Trade agreements entered into by the U.S. are properly monitored Compliance issues are addressed promptly U.S. exporters are provided access to information on the opportunities created by U.S. government market opening initiatives • Two Main Functions: Data Systems Management - Use the information superhighway to provide data and government assistance directly to businesses Compliance Analysis - Analyzes foreign compliance with trade agreements by reviewing legal, economic and policy issues http://www.tcc.mac.doc.gov

IPR and Trade Compliance Assistance

The US Embassy IPR Toolkit

 http://www.beijing.usembassy-china.org.cn/ipr.html

China IPR Advisory Program 1 hr free consultation  http://www.abanet.org/intlaw/china_program2.html

USPTO: free China conferences

(www.stopfakes.gov)

IP webinar series

 http://www.stopfakes.gov/events/china_webinar_series.asp

National Institute of Standards and Technology

 http://www.nist.gov/notifyus

Case Example: Client Video

Contact Us:

Alaska U.S. Export Assistance Center

www.export.gov/alaska 907-271-6237

CHINA

China Business Information Center at [email protected]

export.gov/china Contact me at: [email protected]